Budgetary Reforms and Announcements Impacting Expatriates From April 2025

The 2025 Spring Statement and information included within the earlier Autumn Budget have meant multiple simultaneous changes took effect from either 1^st April or the start of the new tax year, many of which have repercussions on expatriate tax, inheritance, pension and succession planning.

While the announcements of changes to the way British citizens are assessed for inheritance tax were generally welcomed, the extensions to the scope of IHT to include pension assets and the broadening of the Overseas Transfer Tax could mean pre-existing plans and budgets need to be carefully reassessed.

Here, we’ve collated a summary of the main announcements, but as always, we encourage clients to consult their nearest Chase Buchanan team for more tailored guidance and support in evaluating the impacts on their personal portfolios, tax strategies, and circumstances.

Key Inclusions Within the 2025 Spring Statement

Delivered on 26^th March, the Spring Statement focused primarily on growth predictions, without so many dramatic reforms as we saw during the Autumn Budget, which included measures to raise a considerable £40 billion in tax revenues.

In terms of growth and inflation forecasts, announcements included:

• News that the Office for Budget Responsibility (OBR) has halved UK growth forecasts to 1% from 2% for 2025, although with marginal improvements to long-term projections.
• Inflation is expected to rise to 3.2% in the UK over this fiscal period, citing oil and gas prices, while this is anticipated to fall to the target of 2% within the next two years.

Growth forecasts could affect decisions around UK-based portfolio assets and mean that greater currency volatility is a consideration for expats receiving pensions or income sources from Britain.

Inflation metrics could also impact fixed-income investment products, and the future cost of living increases for the UK State Pension.

The news about cuts to disability and welfare systems may not affect all expatriates, but those intending to relocate back to the UK might find this affects their entitlements, they become more dependent on privately funded care, and their loved ones in the UK require greater support.

Increases to the Scrutiny and Checks Applied to Cross-Border Assets and Pensions

The Chancellor went on to announce a ‘crackdown’ on tax evasion, stating that this would increase the number of UK citizens prosecuted for tax evasion by 20% and raise an additional £1 billion in tax revenues.

For the vast majority of expatriates, this is not of any concern, but there are likely to be greater levels of investigations and audits, performed by HMRC, which could have an impact on expatriates where there is any level of uncertainty about their tax residency position.

Likewise, we expect more scrutiny of reporting to ensure that offshore accounts, trusts, assets, and pensions are correctly recorded, reported, and declared for tax purposes.

Reforms to the UK Planning System and Property Investment

Expatriates with UK property portfolios or British business assets positioned within the property sector will potentially be affected by the changes to the planning regime, which is hoped will increase housebuilding levels to a 40-year high while contributing an increase of 0.2% to UK GDP in the next four years.

Some of the finer details have yet to be disclosed, but the government is working on making planning applications less bureaucratic and more streamlined, making it easier for new housing and infrastructure projects to go ahead.

This is another reform that will impact specific groups. Still, for those with investments or planning to invest in the property sector or those who may consider returning to the UK and undertaking a construction or renovation project, this might mean that housing prices become more stabilised and that planning applications are less arduous.

Autumn Budget 2024 Changes Taking Effect From April 2025 and Onward

The more impactful reforms, of course, were those previously announced in the earlier budget, including the following:

• The news that UK pension assets will be included in the scope of inheritance tax from April 2027. This will significantly impact succession planning and may require timely discussions around pension and estate planning now.
• Changes from April 2025 to the non-domicile tax regime, where expatriates returning to the UK and those newly resident elsewhere will be subject to a new residency-based assessment to determine their tax positions.
• Increases in capital gains taxes and additional surcharges on second homeownership will mean expatriates who own or plan to sell a UK property asset may need to revise their budgets and potentially realign their plans accordingly.

Notably, the pension reforms mean that all UK-based pensions and any qualifying non-UK pension schemes, or QNUPS, will be equally subject to IHT in the future.

This was coupled with another announcement that Qualifying Recognised Overseas Pension Schemes, QROPS, will no longer benefit from exemptions applied to the Overseas Transfer Charge (OTC). This tax is levied at 25% on UK pensions transferred elsewhere and previously excluded transactions transferring funds to QROPS based in the EU and Gibraltar.

Although there are alternatives with similar tax advantages and the flexibility to access lump sum drawdowns, such as a Self-Invested Personal Pension or SIPP, we would advise anybody planning a QROPS transfer to seek advice before proceeding, given the significant increase in the associated tax burden.

Capital Gains Tax Increases for Basic and Higher-Rate Taxpayers

Finally, the announcements of increases to Capital Gains Tax (CGT) rates, which took effect from 30^th October 2024 will be unwelcome by investors, who are subject to the tax when selling assets including bonds, stocks and property. The changes mean that CGT will rise from 10% to 18% for basic-rate taxpayers and from 20% to 24% for those in the higher-rate brackets.

Importantly, trustees and other representatives will also see the same increase in their CGT rate, but the effects from an expatriate perspective will depend on each individual’s tax residency position, the location of their assets, and the timings of transfers or disposals.

As we’ve seen, there are numerous reforms which could have varied and, in some cases, considerable impacts. If you are concerned about your tax exposure, unsure how reforms will affect your plans or need more personalised guidance, please get in touch with your nearest Chase Buchanan Wealth Management team to find a convenient time to speak with one of our accomplished wealth management advisers.

All investments carry risk, including the potential loss of capital. You should carefully consider whether investing is suitable for you, taking into account your personal circumstances, financial situation, and risk tolerance.

*Information correct as at June 2025